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Survey Reveals Active Management Key Beneficiary of Trade Wars, Cash Increases

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According to the quarterly SWFI Global Asset Owner Survey conducted in November 2018, sovereign funds, superannuation funds, endowments, and pensions still perceive that increased protectionism is the biggest tail risk. At the same time, a good number of respondents viewed Trump tariffs and trade wars as a generator for listed equity prices. SWFI interprets this as the need for active management will increase for managers to identify winners and losers from trade policy, supply chain shifts, and beneficiaries of domestic production. Emerging market debt risk became the second most popular choice regarding the largest tail risk for public asset owners, juxtaposed against asset owner demand in “Rest of Asia” assets. This systematic survey captures the essence of what global CIOs and allocators are feeling when it comes to risk, markets, and capital allocation.

A cold shoulder for blockchain, as none of the respondents plan to devote significant resources toward the implementation of distributed ledger technologies, versus optimism from the last quarterly surveys.

Similar to the previous quarter, asset owners in the survey indicated an overweight in geographic asset allocation to Japan and India in the next 12 months, while investors turned bearish on Europe ex-UK. Asset owner respondents also became bearish on credit strategies, real estate funds, and emerging market debt allocations.

TAKING PROFITS: More Asset Owners Accumulating Cash

Asset owners were bearish on allocations to listed infrastructure, gold, and commodities, while bullish on credit strategies, active emerging market equities, active U.S. equities, active international equities, private real estate, and cash. 46.67% of respondent showed a preference to increase allocation to cash, up from 40.63% from the September 2018 survey and 30% in June 2018.

The quarterly survey targets sovereign funds, pensions, endowments, superannuation funds, foundations, government funds, and other asset owners. Totaled survey sample size was over US$ 2.38 trillion of assets under management.

According to Michael Maduell, president of SWFI, “Sovereign funds and pensions are hiring and firing money managers and internal staff. They are keen on discovering talent that can navigate the outcomes of trade wars and protectionism, while generating alpha in a rising rate environment. Furthermore, we predict increased bloodletting to occur in the current environment, priming markets for deeply discounted assets.”

More About the Global Asset Owner Survey

This is SWFI’s sixth quarterly survey for asset owners. To participate in the next quarterly survey, CONTACT research@swfinstitute.org.

Antares Bain Capital Complete Financing Solution Backs symplr Deal

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On December 10, 2018, Antares Bain Capital Complete Financing Solution provided a senior secured unitranche credit facility for Clearlake Capital Group, L.P. to acquire symplr, a healthcare governance, risk, and compliance software-as-a-service platform from Pamlico Capital and The CapStreet Group. Golub Capital provided financing for the transaction as well.

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PSP Investments Exits Antelliq

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On December 14th, Private equity firm BC Partners, Public Sector Pension Investment Board (PSP Investments), and other minority co-investors have signed a definitive agreement with Merck, known as MSD outside the United States and Canada, to sell Antelliq Corporation, a Vitré, France-based provider of digital animal identification, traceability, and monitoring solutions. Upon close, Antelliq will be a wholly owned and separately operated subsidiary within the Merck Animal Health Division. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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JPMorgan Edges Out Hamilton Lane on Florida SBA In-State Mandate

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The Florida State Board of Administration (SBA) manages a plethora of Florida state funds, including the state’s defined benefit plans. Florida’s SBA awarded a private equity portfolio mandate which targets high-technology businesses in Florida to J.P. Morgan Asset Management. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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